L.M.
I haven't heard it used like that but I have heard it used inappropriately (such as to claim racism when a situation involves at least one person of color and one that is not). When I say it used inappropriately what I mean is someone is claiming racism when the situation has nothing to do with the race of anyone involved...just because there are two or more people involved of differing race does not make the situation about their race....sorry, that is actually a pet peeve of mine!
I don't think it is a good alternative to "lame" or something similiar and it doesn't take away the "power of the word" because the word still means what it means and it just reinforces the excessive misuse of the word...just like "discrimination" is also often misused.